Online video streaming company NeuLion has announced it’s acquiring DivX in a deal worth $62.5 million.

NeuLion helps power many big-name platforms, with Microsoft inking a multi-year deal to deliver better quality video for Xbox One users. Indeed, Microsoft revealed last year that it plans to broadcast live NFL games at 60 frames per second (FPS), roughly double that of traditional TV conduits, via the official NFL Xbox Live app.

DivX, on the other hand, has a long-established reputation in the digital media realm, thanks in large part to its DivX codecs, which let creatives compress large video files while retaining a relatively high level of quality. For example, its H.264 codec can shrink a digital video so that it only uses around half the space of the DVD-standard MPEG-2 format. It has also licensed its technology to a myriad of electronics firms and entertainment companies, including heavyweights such as LG, Samsung, and Toshiba.

DivX was acquired by Sonic Solutions for $323 million way back in 2010, with Rovi buying Sonic Software for $720 million shortly after. Then, in March last year, Rovi offloaded DivX to a couple of private equity firms for just $75 million in a combination of “cash and additional deferred contingent payments.”

The new $62.5 million transaction consists of $37.5 million in NeuLion common stock, and a $25 million convertible note. The deal is expected to close in Q1 2015.

The race to 4K

DivX has previously launched High Efficiency Video Coding (HEVC) technology to support 4K ultra HD compression, effectively meaning super high-quality video across multiple devices without straining the available bandwidth. And this is key to NeuLion’s interests in DivX, as the deal comes at a time when 4K is finally expected to explode.

While 4K has been around for a while, its commercial uptake has taken a while to gain traction in the consumer realm. However, with more 4K monitors and TVs arriving on the scene in larger numbers and lower prices, and mobile players taking note too, 2015 could well be the year that 4K finally arrives with a bang.

Indeed, the NeuLion press release issued earlier today makes specific reference to the “global shift to 4K video and over-the-top services,” with this deal placing the company at the forefront of the movement. “We are extending our franchise and bolstering our capabilities with our acquisition of DivX’s entertainment and consumer electronics customers, advanced 4K video enabling technology products and expansive geographic reach,” said Nancy Li, chief executive officer of NeuLion.

According to a recent report from Futuresource Consulting, 4K TV will grow swiftly, with 100 million shipments forecast by 2018, which will be 38 percent of the TV market.